E-Malt.com News article: 2553

USA, Boston: The Boston Beer Company, Inc. announced on April 26 first quarter 2004 volume, revenue and earnings compared to the first quarter 2003. For the 13-week period ended March 27, 2004, The Boston Beer Company recorded net sales of $44.7 million, a 1.5% decline from the 1st quarter in 2003. Net revenue per barrel increased by 1.1% during the quarter primarily due to price increases. As reflected on the following chart, reported shipment volume for the period was 263,000 barrels, a 2.6% decline from prior year.

The Company recorded net income of $1.3 million or $.09 per diluted share for the quarter versus a net loss of $0.1 million and ($.01) per diluted share for the same period last year. Gross margins as a percent of net sales increased to 59.5% as compared to 58.6% in the prior year first quarter, principally due to net price increases implemented in the 1st quarter 2004 and certain operating efficiencies at its Cincinnati brewery, partially offset by changes in package mix. Advertising, promotional and selling expenses for the quarter were down by $1.8 million or 7.7% in comparison to the same period last year. The decrease was primarily driven by more effective purchasing of media. Additionally, point-of-sale expenditures declined by $0.8 million from the same period in 2003 that included an investment in new style tap handles. General and administrative expenses decreased by $0.6 million or 15.6% in comparison to the same period last year, due to reductions in employee-related costs and legal expenses.

Boston Beer Brand distributor sales to retail (depletions) totaled 248,000 barrels, a 1.8% decrease from the first quarter 2003, primarily as result of declines in Sam Adams Light(R) volume. Shipments and orders in-hand suggest that core shipments for April and May 2004 will be up approximately 8% as compared to the same period 2003. Actual shipments for the current quarter may differ, however, and no inferences should be drawn with respect to shipments in future periods.

Jim Koch, Chairman of The Boston Beer Company, said, "Samuel Adams Boston Lager and Seasonals combined depletions grew approximately 6% in the first quarter, helped by strong growth trends in our on-premise draft business. This growth was offset by the declines of Sam Adams Light as compared to the first quarter 2003 when the brand was still experiencing strong trial sales. We see similar trends in the order mix received for the second quarter 2004. We continue to be pleased with the current Samuel Adams Boston Lager advertising, while working aggressively to develop stronger Sam Adams Light messaging. We are supporting Sam Adams Light in the second quarter with TV and print advertising but it is too early to determine what effect this investment will have on Light volumes."

Martin Roper, Boston Beer's Chief Executive Officer, commented on the Company's core initiatives, "We are committed to growing Lager, Light and Seasonal brands and continue to focus on developing optimal advertising campaigns. We expect the continued difficult comparables for Sam Adams Light to drag down aggregate depletion volumes during the next two quarters, even if our other brands continue the growth patterns seen in the first quarter. We completed Sam Adams Light positioning research during the first quarter and expect new programs to be introduced in the third quarter to position Light more strongly for growth within the Better Light Beer segment. We are pleased with our overall financial performance in the first quarter 2004. Our gross margins improved over 2003 due to planned price increases and some operational improvements at our Cincinnati brewery. We continue to work on optimizing all of our resources and our pricing strategies given competitive activities. While the Company is beginning to face cost pressures related to freight and brewing costs, based on current information, we still expect double-digit earnings growth for 2004. We remain prepared to increase investment in our brand to drive long term growth at the expense of earnings, if we have proven growth vehicles worthy of such investments."

The Boston Beer Company's balance sheet remains strong with $46.0 million in cash and short-term investments and no debt. The Company's cash flow also remains strong, delivering $2.8 million in operating cash flow for the 1st Quarter of 2004. Although the Company did not repurchase any of its shares during the first quarter, it remains committed to re-investing in its stock and has $5.2 million remaining under an $80 million board authorized spending limit related to the Stock Repurchase Program. Through April 23, 2004 the Company has repurchased a total of 7.1 million shares of Class A Common Stock for an aggregate purchase price of $74.8 million.

The Boston Beer Company is America's leading brewer of world-class beer. Founded in 1984 by sixth-generation brewer Jim Koch, the Company has won more than 650 international awards for its better-tasting beers. Samuel Adams Boston Lager(R) is the Company's flagship brand, celebrated worldwide for its high-quality ingredients and traditional brewing techniques. The result is a beer renowned by drinkers for its full flavor, balance, complexity, and consistent quality.


28 April, 2004